Sustainable Finance: Commission publishes EU Taxonomy draft Environmental Delegated Act

Following a long period of internal work, the European Commission has now published its draft Environment Delegated Act stemming from the EU Taxonomy Regulation. This Delegated Act will define technical screening criteria for the determination of sustainable economic activities of the 4 remaining objectives: (3) sustainable use and protection of water and marine resources, (4) transition to a circular economy, (5) pollution prevention and control or protection and (6) restoration of biodiversity and ecosystems, under the EU Taxonomy Regulation. A first Climate Delegated Act on sustainable activities for (1) climate change mitigation and (2) adaptation objectives had already been adopted in December 2021 and is applicable since January 2022.

As expected by the actors of the sector, the draft DA includes provisions targeted to construction. Construction-specific activities include the construction of new buildings, the renovation of existing buildings, the demolition or wrecking of buildings and other structures, the maintenance of roads and motorways and the use of concrete in civil engineering works.

The European Commission has consequently opened a feedback period on this draft Environmental DA and its accompanying annexes, which will run until 3 May 2023.

The proposed provisions in the draft include detailed restrictions when it comes to the use of primary, and subsequently of secondary raw materials in new and renovated buildings, which could prove particularly challenging for SMEs. The overall complexity of the Taxonomy obligations directed towards construction companies is an element of worry for construction SMEs which are concerned about their access to finance once this set of rules is eventually adopted and implemented.

Construction SMEs, which make up the vast majority of companies in the construction sector, are keen to contribute to the green transition, and should thus be taken on board and even be considered the norm when instating such regulation. EBC notably regrets the fact the no representatives of the construction sector have been included in the renewed composition of the EU Platform on Sustainable Finance, raising question marks for the implementation phase of these reforms.

EBC will continue to follow the developments on the sustainable finance front and voice the requests and needs of construction SMEs and crafts.